Navistar to cut hundreds of jobs by September

Navistar International Corp. confirmed Friday it will cut “a few hundred” jobs as part of a massive ongoing turnaround plan.

More than 140 contractors will also be cut, according to a letter to employees obtained by the Tribune. The cuts will be made by early next month, and will be focused on support areas where they will have the least impact on day-to-day operations.

The Lisle-based truck and engine maker, which has already cut hundreds of jobs due to poor financial results, indicated in January that there would be more jobs lost.

“This is not strictly a headcount reduction exercise or about 'doing more with less,” the letter read. We're also reshaping Navistar to address the organizational changes that limit manager and employee effectiveness.”That includes “narrow spans of control for many managers, duplication of efforts and lower-value work,” according to the letter signed by CEO Troy Clarke and Chief Operating Officer Jack Allen.

Navistar said in June that its loss widened in its fiscal fourth quarter as it absorbed higher-than-expected warranty costs and lost sales as it transitioned to a new engine technology.

During a conference call after the results were released, Clarke said that progress on its turnaround had been slower than anticipated. It originally aimed to post a profit again by the end of the year, but Clarke said in June it was now taking things “one quarter at a time.”

Navistar has not reported any planned layoffs to the state this year in accordance with the Illinois Worker Adjustment and Retraining Notification (WARN) Act. WARN requires employers to provide 60 days advance notice of pending plant closures or mass layoffs of more than 250 employees.

Spokesman Steve Schrier said the company is still not sure whether job reductions in the state will be significant enough for a WARN filing. The cuts will take place across the business, which has 15,000 employees nationwide. About 3,000 of those are in Lisle, Schrier said. Navistar also has a significant operation in Melrose Park and a parts distribution center in Joliet.

According to a report filed with the state in June, the Lisle location had 3,920 employees at the end of 2012, highlighting the ongoing loss of jobs at the company’s headquarters. Navistar cut a deal with the state in 2010 to keep at least 2,200 jobs and create 400 more in exchange for $63.9 million in corporate income tax credits over 15 years. The deal also included $750,000 in training funds.

“We've done the right things but we need to do them better and faster,” Schrier said. “This is not an easy decision but it's something that's necessary.”